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tv   Squawk on the Street  CNBC  June 14, 2013 9:00am-12:01pm EDT

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>> he did. >> thank you, joe. i love you. >> and steve and michelle, also. >> it was fun. >> playing the "brady bunch" here and you guys have a lot of fun on the golf course. okay. very nice. guys, we will see you on monday and have a great weekend, everybody. >> "squawk on the street" is next. >> "squawk on the street" begins right now. ♪ and we began to rock steady ♪ steady rocking all night long ♪ good friday morning and welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange and what a reversal overnight. and the nikkei is going to fry to catch up off of the intraday high and we will see how much damage they were able to repair. on europe, we will keep an eye on the green scenario for the continent, but the close over there is a few hours away. overnight, nikkei in japan
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recouping some losses, but remains in bear territory. we will keep an eye on that. the final road map begins with the day of trading in an incredible volatile week, and what kind of market could we see? we will get you ready for the trading day. >> what type of calls will impact the rally? we have google added to the ever corps's value buy list. >> and we have a strong report from the furniture retailer restoration. and also consumers to get access to the consumer sentiment report, and that data hits the tape and we will watch it "tick by tick" market reaction. >> depends what you are paying, i guess. what can we expect for the dow this week? coming off of the 180-point rally, and the s&p with the biggest gain of the year, and the s&p up, with the bond funds
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taking a hit. and bond funds are battered in the wake of rising interest rates. jim, what did you make of yesterd yesterday? >> well, thank you for retweeting me at 4:00 a.m. i feel that what has happened is the maestro. we used to say, get the maestro, and ben bernanke took a good time to talk to phil rose enrath, and you can't get a reversal where people are leaning the wrong way where people are pressing the bet, and he comes on and says, i am not going to let this happen and you think they don't have any bullish, and you don't think that i know what i'm doing? well, guess again. ben bernanke underestimated by wall street. >> and the fed says he has a communication problem, and the others say it is a market comprehension problem? >> well, the latter. i think that he was artful in the last testimony. >> i say in the next few meetings. >> yes. and how do you say hypothetically we will.
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and suddenly he puts the data point, and i don't know the backup rates were so severe and then jamie dimon comes out to say, we are going to the normalized rates and good interview with toll brothers with becky and joe, and this is the beginning to cause a stampede of people off of the sidelines to buy a house. obviously not refi'ing, but obviously said, we don't want a rapid rise and the fed chief does not want a rapid rise. >> and this is very well an overreaction in part by the investors across the asset classes. now, the idea that we will go from 2.2 to 3.2 in a month is farfetched. >> well, the data does not support that. >> it doesn't at all, but to those who say when the eggs it does finally come and when thaefr is going to be and taking the foot off of the gas and not just tapering, but putting on the brakes, how they manage the exit and can do it in a way that will not dislocate a lot of markets is still foremost on a
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lot of the investor's minds. >> we found out that it is not our market that it is in. it is brazil, thailand and there has always been as we know from '96 and '97 that people are so out of position, and always reaching for yield in the bizarre row markets that they don't understand, and currency guys feel so smart and reveal they have no clothes on, but there is an amazing, what are you doing ben bernanke, and you are not supposed to do that, and they are not skeptical in a lot of markets, but skeptical here though. >> and the pain in the international markets and a lot of them have barely retraced the losses and the bounces on the yen crosses have been pretty weak, and doesn't that eventually have to spill over to the u.s. which looks great in comparison for now? >> well, it has historically and takes a little time to travel here, and we know that it does catch up, and if you take a look at the '94 and '96 in thailand and '97 russia, it does hit
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here, if it is not stemmed, and south korea was stem and bob rubin was adept at getting it stemmed when he was treasury secretary, and washes up here, but it is never as brutal as the other markets, because they are thin and when they are sold the exit crushes them. >> and i want to know when people get the statements as we like to say, and they take a look at the municipal bond fund for example. >> and send out the charts. >> well, i made one of them up, and look at the damage. new york state municipal bond fund and you look at it, and your capital has been crushed. there it is. look at that. >> that is the one i sent you. i didn't send that one, but some others. >> what are you going to do when you look at that and hey, i had a fairly high-yielding product i have been in for a while and the capital preservation i thought was key here. whoa. >> and half of the people put it in the drawer like they did with the stocks, and half of the people are going to panic. i sent you and david charts all day.
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>> during the course of the day, he is sending these things. >> and the headline is always sorry to bother you. our own david faber, sorry to bother you, but so many that look like that. the only other ones -- >> damage. damage has been done. >> and those are not going to go back. they are not going back to where they were. that is done. >> and we are probably not going back to 1.6 on the 10-year. >> no, we are not going back to 1.6. >> and you say, i should have been in equities and you want out in risk assets. >> for everybody who wants to go in equities does not understand the psyche of people who constantly, and greg smith was a great strategist in the '90s and he used to call it the greatest story ever told and the 401(k) into equities and the whole thing. >> and the demographic shift. >> that is totally over. it is one more, you know what, i have had it, and give me the cds and you don't lose money. >> all right. give me 0.2%. >> you are making nothing.
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>> and inflation running 1.7 on the wholesale level today. >> that is the awe stair ri that ben bernanke is -- and you will hear a lot about how he is hurting the sabres more than usual, because this is what people were saving in. i sat next to david faber for the last two years, and you have never stopped saying that this would occur and going to be swift when it happens and you will not expect it. it was even more swift than you and i thought. >> i think, yes, but i would not have expected four weeks. >> astonishing. >> four weeks in may or june, whatever you want to call it. >> so many that looks like that and we could put up in real estate trust and they bounced off of the bernanke put, but the destruction here is insidious, because it is unexpected and people were low. i mean, you know, i have municipal bonds and i don't look at them, because like the income, but these are people who are in and they thought that it is gone and they were going to lose. >> it is the funds and not the bonds.
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>> and the funds, and put a period on that part of the conversation, so next week at the meeting bernanke tries to walk that all back. tries to walk that testimony back. >> i think that he never wants to go totally against the market. he knows that you can only put some of the genie back in the bottle. this is not like the half pregnant thing, and the judge wapner talks about position. and maybe it is not the person who is in the muni fund, but you just saw you who is in the thailand fund, you can see how bad it is and walk the rates back and take and not all of the way, but certainly, calm down and get out. >> get out, by the way, and we should say fix the income investors and the taxable bond and etfs and the outflows 5$5.5 billion the most ever according
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the lip pert, so it is happening. let's talk about technology news with google added to ever corps's list, a nd saying that they are gaining traction with the products and seems that con vick shun is stronger. and deutsche bank upgrades groupon to a buy. it had been on a hold. and bmi sues pandora who is the target of a song computers over licensing fees because pandora refused to pay higher fees for playing songs over multiple devices. that is a lot of names there. >> i added google on the list of what you should buy for kids. i took apple off by the way, because i think that google is -- it is still taking share. it has not begun to monetize what it is monetizing, and google is not a expensive stock according to the 2014 numbers and the only thing bad is that everybody feels like i do. >> and 1014 for ever corps, and
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there are nine four-digit targets on google on the street. nine. >> i know that. is the big problem, because that means that it is set up for disappointment. >> it is all still about search for that company, and i know that, but i tend to focus more on the things that may have nothing to do with what is going to go on the stock market like the self-driving car or the google glass or the efforts in fiber which should be watched closely. >> the midwest. >> yes, and kansas city and a number of others -- >> evercore, and i have not read the note. >> and other areas in of the country to cherry pick. and cable companies watch out, because if it is the key product and google is going to invest capital and get 25% of the people to sign up in the particular municipality as part of the deal to give it to the library and to the hospitals for free, it could start to pick people off. >> and the only thing that could stop google is the government, and they have already had the
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ftc issue, but there's a product that google does forred ed advig exchanges and it is a thing that is too difficult to go in a typical show, but it is called programmaticed a ver tizing which is what everybody talks about on the web that you have to have an exchange and it is google's. >> they control so much. >> it is incredible how powerful. >> and not the mention youtube, which forget the purchase price, but a lot of the recent notes on google say it could be a $20 billion business just youtube alone. >> yes, it was -- right. >> and by the way, having had some company dealings with google, i mean, it is an incredibly honest and powerful compa company, and it is not like they have -- i mean, it is an algorithm and like halp in 2001. >> opened up the pandora doors. >> yes, it is not a doomsday machine for those who go against it, but it is a smart company
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that is a cokocomputer. >> it did not end well. >> right. when you see daisy -- >> well, full metal jacket and the rest of them. >> the "shining." >> yeah, here's johnny. >> and clockwork orange. >> oh, hello, heap of death. >> keep going. >> we are a few moments away from the last key economic number before the opening bell, and we will get industrial production at 9:15 in a few moments. and knock on wood, we will dig deeper into restoration hardware surging in the futures market, and markets are looking okay here on a friday. back in a moment. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95.
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may industrial production unchanged. utilization, well, a bit of a drop. 77.6 from a revised 77.7, and we were looking for 77.8, but here is the granular 78.3 from march, and still resides at the highest level since june of '08 to give you an idea that we have definitely done some slippage on this number to get a different handle into the 77 camp, but still not a bad number, and if you look at at the utilization rates, it is lofty, but not as
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lofty as it has been. carl, back to you. >> thank you, rick. talk to you in a few minutes. shares of restoration hardware are surging in the free market, and the retailer is reporting first quarter earnings at six cents, and also the big con sense sus is that with the furniture sales up 1%, and jim, this went public not that long ago. >> they did a secondary at $50 and this is a remarkable company and the conference call is a thing of beauty, and they are redoing the old store when it was private and became public and thought it was a store in the mall, and it became like a gallery. >> they a lot in there and a lot of furniture, rugs, chandeliers, and you know, lighting, all sorts of stuff. >> i just write them a check, because the stuff is great looking. and the stuff in the cal that was a thing of beauty and a well staged play they talk about
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richard harvey joining us for kit chen and tableware and where is he from? where a lot of the people are from, williams snow ma so you have a school that is producing graduates that go to restoration hardware and go to do a phenomenal job, and this is a terrific company. >> we got retail sales earlier in the week, and furniture stores saw declines for the fourth month in a row. >> this one of the greatest share takes that we have seen, and they talk about it, we are kind of, and they are not puffing or arrogant people, but to base the subtext of this is that we are destroying the rest of the industry. >> and so you-year-old not follow on the ethan allen order? >> well, i like ethan, but this is a company that has momentum like you would not believe and the best momentum of any retailer there is here, and they say we are not the same restoration hardware and the fall launch of the contemporary -- sorry to read, and the full contemporary art, and this is the opening of our first contemporary art in the
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chelsea meat packing district, and the creators of the rain room which is the exhibit at the museum of art and the finest architects and the finest people, and the prices are not outrageous. >> and to broaden it out, "usa today" money talk about the health of the consumer. they seem to be making choices, jim. buying more cars and not going to restaurants quite as much, right. i mean, that the benefits of the gasoline coming in. >> yes. >> it helps, but not across the board. >> right. that is controversial where they are going, because darden, the tone is olive garden and the red lobster and a tone that says it is better, but the going out quotient, panera is saying that things are better and little bet better chatter of how chipotle is doing this quarter, and you say, this is little $6 to $9, but it is difficult to figure out the restaurants, but not difficult to figure out the restoration. >> yes, it will open up at historic high.
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>> yes. >> and very good management. >> and as we go into the halfway point, how do you make sure that the portfolio is full of profits? keep your eyes and ears open for cramer's "mad dash." and the futures kick off at the s&p's second best day of the year yesterday. "squawk on the street" from the nyse is straight ahead. out there owning it. the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives. ♪ fly me to the moon ♪ let me play among the stars
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♪ i need your love back to cramer's "mad dash"
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and we are about eight minutes before the opening bell. talk groupon. >> well, it was a tricky call and better sentiment and billings, but the thing about groupon, it is a change company from when mason was there, and they have grownups running it. it has become, and i know someone who is very intimately involved with groupon and when i was bashing it, he said, wait until you see what happens. they are beginning to get some traction on the products, and now i know that my friend herb greenberg would say, please, jim. cash flow and that kind of thing, but i think that the company will surprise us. >> you do? talking about livekovski? >> yes, ted is a real guy, and we know him from america online, and he is a very good entrepreneur, and i'm not in love with it, but the idea na it is a bad company is not true. >> and it is up. >> well, maybe it is, because of the mason discounts. >> and what else?
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>> solar city, and you know i'm fascinated by elan, and it says that the public utilities commission may do some things to support the company. these are all squeezes, solar city is a squeeze and tesla and i don't know my kids have said to me, why don't you get a loan from solar city and put a panel on the roof? i mean, this is the two stocks that the kids know are tesla and solar city. and it is just part of their conscio consciousness, because of the electric cars are good for the environment, and solar city is forward-looking company and they have captured the image in addition of younger people, and youth loves these stocks. >> i look at the three-month performance and up 123%, and short squeeze, whoa. is that all of the youth money going into it? >> i was with investors last night who said that 95% of the people, and 75% of the people who test drive a tesla buy a tesla. i said, i'm not going against musk anymore. if it is 75, i'm not going the
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disagree, because everybody who has disagreed with musk has been run over by a tesla who went zero the 85 which is faster than any car i have ever been in including the bmw 760. >> and it is quiet. >> yes, a 12 cylinder engine. >> and so you are going on when it is public? >> yes, i like it. >> and tesla, three-month performance 172%, and if you were part of that, you can retire now, if you put enough in. >> at any end, we have a tesla charging station, and it has brought customers. >> it has? >> yes, yes, it has brought customers. this is it. this is the holy grail. i did, and you know i did the piece on tesla two weeks ago and i dealt with a partner in a major firm who said i saw the piece and bought a tesla. i said, i was not trying to advertise tesla, and he said a great one, i went to get it the next day. can you image snin. >> trading back at $100 a share, and we have a lot more to keep an eye on, and we have news that i have been follow, and what a
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volatile trading week, so where does the market take us today? well, we have the opening bell five minutes from now. the day building a play set
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you are watching cnbc's "squawk on the street" live from the financial capital of the world live friday and the opening bell is coming up in a couple of minutes after the 180-point up day for the dow. jim called it a big reversal and in a way you called it a good moment for bernanke like the sailor uses the wind, jim? >> that is it. it is a great analogy. he does not want to fight the wind. on a down day, he is not going to waste the capital, because you don't want people to say, hey, you know what he did, he called me and still went down. he is ineffective, but you pick a day a reversal day, and people are leaning the wrong day and you put out the chatter, and saying that this is what i want and the next thing people are scrambling. that scramble in the last hour that was powerful. >> and it is bleeding over into today. the crude futures in turn, the crude futures up 1.23, and we
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will talk to john rosenrath who is going to be on the 8:00 hour. >> he has in our various times in our careers there is a go-to guy, and not guys who say, i got a call from ben, and taking the 2-year, no, it is because he is a trusted person and bernanke talks to him. >> and that will set up a couple of day meeting. and meanwhile, what a crazy week for deals, david. you will look into the elan news. >> elan shares are up, and i want to caution people, because the company is putting itself up to sale, but when it comes to elan, you have the complications related to the royalty pharma, but they have been out there for a while. if there were othis potential buyers, they had a chance to come in here, but carl, we will talk about elan in the faber report. >> all right. with that we await the opening bell. if you are wondering how we are doing for the week after the up/down action, the dow is down 1.5% for the week. need 72 points to get back to
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even. and by the way, a couple of weeks from the end of the quarter we have not had a up qe1 and qe2 since 2007. >> some people would say that ended badly, and today is about refinancing and how there is not a lot of refinancing and that is going to hurt the bank's earnings, and no, people are looking for the net interest and that is going to help the banks. i think that the banks are the swing this quarter. they never gave up the gains. you see the bank stocks that people have been saying bad things about the bank, and that is because when you see the quarters, you will see that this particular interest rate move was fabulous with them. i kept track with somebody who keeps up with the cd rates around the country, and you are making nothing, and they are making something. >> there's the opening bell, and looking at the market at the top of the screen. therapeutics md, a women's health care product listing
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celebrating its listing on the nyse. and a swedish-based producer of vegetable oils and fats. >> cowabunga. >> i wish you had been here yesterday, because david and had to handle coty by ourselves and it was an eh day for coty and today they point out that the ipos priced above is slipping. >> well, i like that. one of the things that we saw was that we saw looking at gitmo right now, and we saw way too many companies with the sliver and you put out a little and bingo, everyone is excited and other than linkedin gives up the ghost. i like a rational ipo market where it is vague. that not so bad. >> but it priced $17.50, and below that. it broke syndicate on the day of the trade.
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>> and you mean that the company is not doing well? >> well, it is the selling family, and the riemans behind banhizer. >> well, coty is pokemon and not gigamon. >> and bowing is to announce versions for a bigger 757. >> and today s the anniversary of the 777 and the airbus sent the first plane into the skies overnight. >> well, do something with the parents and the kids here and go to the new orleans world war ii museums which is one of the most stirring museums in the world. and look at the heartwarming and the actual 717 that was like crashed off of greenland and they preserved it. boeing has a long history of doing the right thing and building the best machines in the world, and people bet
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against them at $70, $80 and $90, and at par betting against boeing. good luck. >> follow-up on dupont, jim. and the guidance yesterday was neutral. >> and i know that at any actionable, she said it is a buy, but we don't own it for the trust, because it is related to the worst weather season in 100 years and the cfo did a good job on the conference call, but the downgrade, because it has been a winner, and people are trying to preserve the wins. >> and i did want to hit on a couple of the stocks i followed with the takeover scenarios, dell and sprint. start with dell, and down, and the "new york post" reporting that carl icahn there having trouble raising financing. let me tell you what i heard yesterday in speaking to the financing sources, they had indicated they had not heard from mr. icahn in some time and
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circled more or less say $5 billion in financing for dell recapitalization that he and the asset financial management are proposing, however going up in the financing as a look at the liquidity gap pointed out by dell last week, they have not heard from him. they are wondering if in fact he is going to follow through with the larger financing, perhaps, and i remember, i told you the interesting components of the refinancing is that the banks get 7.5% of the ups if there is in his own position. we will see. but it lays the idea, and thank you, that is the "post" story. >> he is a sycophant trying to raise the ad. >> well, carl, he has circled the $5.2 but is the number $7 billion or more to address the liquidity gap which is a $12 dividend instead of $9 dividend,
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because that is a different calculation. so if you are giving them $12 and a $1.65 option as opposed to $8.50, and you have a lot more riding. >> and yet $8.50 is a reasonable thing in the real world and you don't want to bankrupt the deal. >> well, this goes to the key point of friction, because if you are lever up the company for your own benefit to take 7.5%, why can't you do it for us. >> and pearlman with revlon going private, and it was not that big. >> and o50,000. >> and pearlman is a master businessman, but i'm so conscious that there is a undercurrent southeast management that dell is doing the wrong thing. in the meantime, the company is lucky that pc business has gone soft again. >> listen the special committee has done largely a lot of the right things. i assess whether you love them or hate them is important here, and the institutional shareholder services advice in the vote coming up on the 18th of july.
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it is important their recommendation, so we will see. by the way, real quickly on sprint, and something that i know that the followers on "mad money" like to know. >> yes, important stock all day yesterday. >> and clearwater special committee said fine, and $4.40 from erduen and it is hard to believe they won't refinance there on that soft side. but no word from mr.ergen in trying to raise the amount. >> you think it is not done? >> well, i think that dish 'm afraid to say anything when it comes to them, because whatever i say, it will be wrong. >> and the possibility -- >> well, i don't know. it does not look likely. >> and likely that the spurs can come back? >> come back? isn't it 2-2. >> well, i felt that last night was a real --
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>> well, the first quarter was all spurs, and then kaboom! the big three combine for 85 points. >> wasn't that something? and lebron stepped up. but that game was a tie game going at the halftime. it just, i'm saying that surprises do happen, charlie ergen, tim duncan. >> and they won't close that deal until september, and they are waiting for the chinese anti-trust. those chinese. >> the chinese have an anti-trust department? >> yes, they have to approve the dell deal. >> or they shoot you? what do they do in china? they execute you if you miss the quart quarter. first quarter, life imprisonment, and second quarter is death row. >> i am glad that we are live in beijing right now. >> and the pharmacy guys, they take the capitalialism so seriously. >> that it is. you are screwed with the comput
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computer. it is shutting down now. >> and did mao envision a plan where you had to make the quarter? they are tough over there, and great business people. >> between the nsa and the chinese, you are in big trouble. >> hack me. >> and bob pisani on the floor. hi, bob. >> mixed open, and what i found interesting today despite the turmoil in the last few weeks, did you see the lippert report, mutual stocks record 23rd straight week for inflows. mutual stocks are getting inflows still. international funds are seeing the outflows, and we have been talking about the turmoil in te mortgaging markets, and all of the talk about tapering is causing problems in merging market stocks and emerging market bonds and the etf funds, and david, talking about the quarterly statements and wait until they see them, and remember the eem and the evo, and these markets have been huge among investors in the past few years, and they will be
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surprised by the declines down 6% for the quarter. and the bond etfs have been increasingly popular and that is the emb there with big declines in the quarter as well. talk tact bond funds, and i said a couple of months ago that we will neat a couple of quarters of notable decline. well this is the couple of notable quarters. we are seeing the decrease in the bond funds and seeing them again. total bonds out there down almost 2%, and the corporates are kodown. remember the corporate bonds, you are getting a 2% yield, so that is a significant decline. and the municipals, you have a tax break, but inflation-protected, not much of a yield at all, maybe 1.0 or 1.5%. this is the second quarter of the notable declines and this is going to initiate debate among people once they get the statements and again, a couple of weeks to go, but what is the
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deba debate? most of the people in the games playing talk about going to shorter duration bond funds and for example a high yield fund, and you know them, jmk is the biggest out there, and it has had a notable drop, but the sjnk, and they both yield about 6% right now, and of course, the declines in the sjnk, the shorter duration one is much smaller than the longer one, so everybody is moving about going to the shorter durations. finally, i want to talk about restoration hardware and h historic high, and it has been around for a few months, but it is a simple story here. and look at the revenues with revenues up 38%, and the same-store sales up 41%. david, not the move in high end furnishings, and if you have been in one lately, they have higher end furnishings, but they are not riding the wave that home depot has been riding the lower end competitors, but they are actively managing the stores fantastically, and i was in one
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recently, and it looks beautiful and ritzy, and looks like they have the act together. guys, back to you. >> i unfortunately was into one, too, and i tend to sit in the chair and let others do the shopping. i wanted to mention that the shares are up 8% this morning if you have been follow ing ting t reporting, and it is a complicated story, and elan has transformed itself into a royalties-based company and enormous amount of cash as a result of the deal it did with the key drug company which eventually sold and royal tis on that, and then it continued to try to transform itself as well, but yesterday and in fact, monday officially the shareholders voted down three of the key deals it was trying to do in order to become the royalty-based company. and royalty pharma, the royalty-based hedge fund had been trying to buy it. but it shot itself in the foot, and got it all wrong in terms of
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the record date, and then made the offer condition for the votes at 200 million shares, and it is out of the picture, and now they, you know, yesterday i wish i had mentioned this, jim, i went through all of this, and failed to say, what happens when nothing happens with elan and today, they are saying that we are putting ourselves up for sale officially, but unofficially the company has been for sale for a long time, because royalty pharma had a bid on the table, and if other companies were interested they could have certainly come in there, and this is irish takeover law so it is complex or different than what we do in the states, but keep it in mind. >> okay. exnine me -- >> it is an irish-based companies and everybody loves them for the pharmaceuticals whether it is, you know, warner chilcot being bought. >> and israel and ireland, not sure about them. >> we will see who may be there
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if not for elan, but the point is that the company has been for sale unofficially, and now officially moving to that space. >> and so does that mean to hire a banker before they are receiving income? >> no, a banger, and lawyers and everybody to work with this to fend off royalty pharma, and now i understand that they are lo looking for a price of at least $15, and so if they were not to get that and nothing says they have to get that. royalty pharma unless they meet that deal are off of the sidelines for at least a year according to law. and people are buying the stock, and elan back to having an enormous amount of cash and no real business per se other han the royalty deal they struck with biogen with tesovereign. >> why would you want it? somebody out there. >> it is not clear, but some operating companies could not get the tax base that is in
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ireland, but it is complicated. >> a win, and like sprint. >> yes. better win. >> and now let's look go to the cme with rick santelli. >> thank you, jim. we are looking at the 11-year yields in 10s. look at the month to date chart of the 10-year month yields. the fed is meeting next week and the handicapping going on about how the markets are going to be, and dealt with, and we can see that wednesday, we had a 223 high. there have been stories written talking about the ultimate intensity of the fed buybacks and the quantitative easing. you know, two people in the water who need to be saved by ben bernanke thee roretically, one is the interest rate market and the other is the equities market. both had pretty good jumps when
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the story started to trickle out, as you can see, but look at what happened on the foreign exchange side, which i still say is the most important market long term to pay attention to. the dollar yen two-day chart, and the yen rallied when the stocks rally and the yields went down on the stories, but look at the euro yen, and same thing. as you open up the charts to april 1st what you can see is granular, the relationship held, but the markets are big, because the yen is still holding on to its strength, and the carry trades are big, and pay attention. carl, back to you. >> all right. rick. see you in a few minutes. when we come back, get ready for an early edition of one of cramer's favorites. >> announcer: coming up, there are a lot of superman wannabes in the world, but they can't come close to having the same powers as jim cramer and his "six in 60" and he is going to be saving the world when "squawk on the street" returns. my mantra?
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so you can. all right. relatively flat tape on a friday morning. let's get jim's "6 in 60."
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>> xbox ps 4, don't get in front in the wrong way. >> eli lilly? >> even though they failed in the liver toxicity company, people don't care. good company. >> rubicon? >> well, dump the losers and this is a rubicon minerals and the wrong rubicon, but it is okay, because it is losing business. >> and barkleys on the mx. >> american express saying that it found a hole, but raising the price target and i find that confusing. in other words, you hate it and like it, sister and mother. >> and hormel? >> well, hormel is inquisitive company and sleepy company and reversing head and shoulders and the banks are saying it is a n winner and they will be doing more buying. >> and oppenheimer? >> well, one of the big companies and we had a big oil spill the other day and they bought safety clean. i like the company. >> and you have had a big week on "mad" and last night's show is mind blowing. what is tonight?
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>> "game plan" tonight, and good speculation and that is going to be terrific. rubicon, that is my fault i put the wrong symbol up there. and rby symbol. sorry about that. and this is going to be next week that i believe they will give them the due, but i believe that bernanke has something up the sleeve, and he is more clever than the bears. >> we will see you tonight, jim. >> thank you. >> enjoy the weekend. jim cramer 6:00 and 11:00 p.m., and consumer sentiment is coming up after the break. you may have heard of this in the last few days? >> no comment. >> more "squawk on the street" in a moment. [ male announcer ] with wells fargo advisors envision planning process,
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just a few moments away from the release of the consumer sentiment report, and you have learned first from cnbc that elite traders have gained seconds early access to such data for a fee. eamon javers is all offthat story and at the headquarters having taken an early shuttle to get there. >> well, carl, we are expecting this consumer sentiment number to come out, and what we reported earlier is that traders and elite group subscribed to high-speed reuters group, and at 9:48, it was released to a broader group before the
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conference call, and they get a higher feed to give them the number, and what we have seen is that the spy has traded in advance of the group getting the number, and we will see a explosion on certain days when the consumer sentiment number comes out, and what we will do is to take a look at that and see if it happens again at 9:54 and 9:58 and blink and you will miss it. my personal guess is that because of the con trtroversy t week and the amount of attention this week, we may not see any movement at all on the spy, and we will watch it though, and see what happens. >> well, there is nothing like the transparency of light to rout some players out of the corner, eamon. and can you talk anecdotally, because there is interest surrounding the reporting, and what has the feedback been like for you? >> well, the twitter feed, ov overwhelming positive response and most people didn't know it was happening and they believe it is wrong and some people in t the market should not have access to information that other people don't, and there are free market people who say it is
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private data and privately paid for and perfectly fine, so there is a mix. on my personal twitter feed, people say it is outrageous and wrong. >> obviously, it has polarized views as we continue the watch the tick here with a few seconds to go. >> eamon, hard to say whether the prediction is correct or not. >> there it s. is. it went did you see the movement? >> over to rick. >> and 82.7 is the number, and remember now, this is a june preliminary. why is that important? because our last look was the best that we had seen at 84.5 since july of '07 and brings it down a notch, but we don't know what the final number is, so i guess i will leave it at that and continue with eamon and discuss the issues. >> yeah, carl, if i can jump in here, i did see a movement down in the screen that we are watching in the spdr s&p 500,
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right at 9:54:58 and we can see it on the screens. we have to go back to look at it in super slow mo, and like the nfl films version of this, and we have to look at this, because a lot of the trading happens on a millisecond basis, but there was a cliff that you could see moving down, and if what rick is saying is if the number is an indication of a bearish trend that might support the thesis they were trading on this in advance again today, but we have to look at it and be careful before we come to any final conclusion, carl. >> and the expectation for the june prelim number was 84.5, and 82.7 would be a disap poipointm on some level. >> i want to congratulate eamon, because i know that some people felt that it was a well known thing and obviously the "wall street journal" and "the new york times" didn't, so congratulations to eamon for what i regard as a scoop, even though some people did not believe it was a scoop. >> thank you, jim. >> and thank you for sticking
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welcome back to "squawk on the street." our road map begin s wis with t markets after a week of volatility. how do you position yourself ahead of next week's fed meeting? two big market players will tell us what they are doing with the money right now. plus, bank stocks are beating the market so far this year, but there could be a big obstacle coming that could derail the performance and we will tell you how to play the banks. and lululemon making a big bet on men. they are planning to open up stand alone men's stores in the next few years, and find out if the strategy will mean big profits for lulu. >> and the markets are steady regarding volatility, and front and central of course is the
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fed. tuesday and wednesday of next week, and jim mccorrigan is chief executive of principal investors who has millions under assets, and also joined by jerry from parabus. and jerry, the hilton withstanding the article, but would you believe that the markets are going to be sustained? >> well, we have been on a macro road show this week, and there is a lot of fear that the fed can't put the genie back in the bottle and while there was no liquidity horizon and unending parity of liquidity to have people pushing down yields and looking for the safe yields tlashgs not as safe and yielding as they thought. and the question now is that now that we are talk and the
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liquidity horizon and a year or two away, investors have to reposition for that, and the biggest question is can the fed put the genie back in the bottle a and lot of doubt about that. >> and interesting. when we spoke to you last time on the program, may 24th, jim, you didn't feel that the genie was not out of the bottle and buy on the dips and we would be high attorney marker on the mare today. would-year-old sti you stick wi? >> yes, i would, simon. the volatility is significant. as we have discussed before the u.s. companies are doing pretty well. it is a combination of cheap energy, and innovation productivity and the recovery of the housing market. that actually continues to underpin the u.s. equity market much more than the fed actions. i expect the fed to continue to talk about improvement in the
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job market and eventual tapering. i don't really expect next week to see a big event, but my view is that tapering by the fed will happen around year-end, and maybe fourth quarter or early next year. at this point, the rates will go up. so i think that it is good to be a u.s. equity investors, but not high quality bond investor. >> jim, what has happened the last time you came on, jim, a notable sell-off in emerging markets, and there is a great fear that a lot of the cheap money is going to come out of the merging markets, and that surely has consequences for the very big multinationals, and quoted on this exchange that are doing business and looking for growth in emerging markets in developing nations, and that is surely going to affect those calculations as well. >> yes, near-term, there is going to be a continued growth slowdown in emerging markets. we have seen it with for example with brazil where the growth is barely different from the u.s. growth. with china where the people talk about a hard landing, which i don't believe is going to happen, but i believe that the
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growth is going to be slow by their standards, and that all justifies the bumpiness in the emerging markets, and near term for the next year or two, u.s. equities are probably more attractive, but the case for emerging markets in terms of the growing middle-class and greater prosperity is still there. and these multinational companies running the businesses have to think longer term than the next year. i think that they are right to be positioned for the long term growth, but maybe i would prefer smaller and mid-sized companies that are more domestic in the business for the next year or so. >> gerry, the type of stats that we are seeing coming off of the global market according to stats i saw the other day, if that is the case, if the fed talks again on wednesday in may about being more accommodative, have the investors woken up to the fact that there is significant risk
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here if they are not ramping up the accommodation anymore? >> well, it depends upon the market that you are talking about, because this is not the riskoff environment, but this is a paradigm shift around when liquidity will end. the liquidity horizon is still several years away, because it is not just qe, but you have other bans that are reducing the supply of high quality assets, and high quality assets the doublaa and the aaa assets. so late this year or early next year does not make a difference, because you have substantially reduced as s sassets in a substantially dwroeg environment e. so it is the paradigm shift that we have had is the mark with the appearance of a liquidity horizon, which we have had in the past, the market is clearly moving away fra duration, illiquid ti, and low yield and
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low quality and the u.s. assets will stabilize, because they are at the high end and the treasury market being the most important of the aaa assets, but it supports u.s. equities when in comparison to global qualities the yield is much more transparent than it used to be, but yield higher, and so it will move into this area, because of the excess liquidity and average will in this cycle never recover the highs. >> clear advice from both of you. thank you, mr. fowler and jim corrigougn. >> meanwhile in china, our correspondent michelle caruso-cabrera has more on this. >> overnight lending rates have been rising sharply in the last week and a half. i want to show you shibor and we
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know libor, but this is the overnight lending bank rate, and this is the chart back to the last couple of years and you can see the sharp rise in the last week and a half or so, and first of all why this is happening is that there is a strain going on within the financial system there. possible causes that you will always see before a big holiday and right now they have the dragon boat holiday and not bigger than that, but it is bigger, and because of hawkish rhetoric about shadow banking o going on in china this last weeks in particular. here's the background that you need to know to understand this. interest rates paid by the banks in china are set by the government. the rate right now is below the rate of inflation, so if you put your money in the bank, you are losing purchasing power everyday which has led to a huge rise in something else, wmps, wealth management product, and these are offered by the banks and investment vehicles which invest
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in all kinds of things and many small businesses get the funding this way, and they have much higher interest rates than you can get in the regular saving accounts, and however, with the interest rates is the high risk. it is clear that many of the wmps have dupous controls and dubious collateral and several of them have gone bust in public ways and the products have soared in the last couple of years and raising fears if they go sour, it could lead to widespread crisis and at a minimum decline in credit at the small banks which is what you want lastly for small businesses, simon and guys, last thing that you want when you talk about a possible slowing chinese economy. so shibor is rising sharply, and we have to see what plays out there. >> thank you, michelle. we will talk about the banks here next on the program. they of course have seen the profits recover over the last year, but there could be danger ahead. we will tell you about some big calls on the financials next.
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>> but first, we want the show you some of the most expensive divorce settlements of all time. take a look at that. arnold schwarzenegger's cost him between $350 and $375 million. and mel gibson's more than $400 million, and bernie ecclestone's more than $400 billion. whose is the most of them all at close to $2 billion? find out when we come back. maky filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open ccount.
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before the break we asked you whose divorce cost close to
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$2 billion? one of the most expensive divorces in the world to date occurred between rupert murdoch and his first wife, anna. he reportedly paid her $1.7 billion and now murdoch is filing for divorce from his third wife wendi deng, and with that on the horizon, it could be the most expensive in history, and we will find out who it is and talk to a high-profile divorce lawyer coming up. we are seeing a surprise spike in mortgage rates could spike the housing boom, and downgrade on wells fargo is a sign of what is to come for the financials. let's ask paul miller who is head of financials research with capit capit
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capital, and good morning. tell us about wells and where you see the financials more broadly and to raise the fact that julien tepp was making in the call this morning, has the environment of the banks margin meant that they are actually vulnerable to a ramp up in interest rates? >> well, i think that they are vuler inable in the ramp up of the interest rates because of the security portfolios and loft the banks are trying to protect the asset sheet, and they have added on very low rates and when the rates go up, you could see the book value hits in that process. but in general, most of the ceos want to see the rates up and not down. i know you have seen the downgrades and a spike of the average rates, but the coupon rates are 4.5, and 4.75, which is a lot of room for the re-fis and in the last three years and everybody has been trying to call the end of the re-fi boom, and it has plowed through all of the predictions. i won't sit there to see a spike in the 10-year and say that the re-fi boom is over, and downgrade wells fargo. wells fargo has a lot of levers to pull, and mortgage bank is
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one of them and it is one of the better banks to own. >> and how in terms of wells fargo is the big banks one of the profit, and wells is one of the bigger banks doing that, and that is why people are seeing it harder hit if we don't see a rebound? >> well, wells is 40% of the mortgage market, mainly because jpmorgan and bank of america has backed out of the market due to a lot of the turmoil, and fines that were paid in the mortgage market since the '07 time period. wells is the mortgage player, but when you look at it, it is only 20% of the revenues so what they want to make money on is the balance sheet. a lot of levers still on the revenue side that they can generate money besides the mo mortgages and the large msr portfolio to kick off a lot of cash if you have extension of the mortgages out there. so to sit there and downgrade wells on one issue, i think it is misleading. there is a lot of levers to pull out there, and have the banks made a lot of money over the mortgages in the last couple of years? yes, one of the highlights burk
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the big banks it is not the main driver of earnings. >> okay. bring jason goldberg into the conversation and managing director and analyst with barkleys and would you believe what paul is saying? >> yes, wells fargo in addition to 90 other businesses and the natural hedge of a servicing portfolio, and the company should also benefit from, you know, a decent mortgage market. if you think that the rates have backed up and should stem reactivity, but the home purchase environment has been quite strong. >> and doesn't it come back to the point which is to say that mortgages while they are still there are not as strong as they were, and the rates while going up a little bit are not going up enough to help some of the banks, so ta ha a bank like wells is kind of caught here in the middle? >> well, could mortgage re- refinance revenues decline, yes, and we look at the home purchase side, and looking aing a at the and hamp interest rates despite they have backed up as the home
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prices are rising which you have seen, it is showing the amount of people who can refinance and the people locked out of the market, and so could the revenues decline? it could with wells fargo in particular, it is not the first rodeo, and they have been in business a long time and managed the revenue side and the expense side handily. >> that is good way to put it the length is a long. and i have seen that half of the mortgages out there have a rate that is 5% or higher. so at what level on the 30-year fixed do you really think that people say, you know what, after fees, it is not worth my time. >> you know, anywhere from 50 basis points at 25 basis points people should refi'ing and depends on the size of the loan. small balance won't re-finess and a large will, anything up into the $400 and $500 range. but one thing that the purchase market is only 600 billion right now, and that is annualized origination number and almost
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the same size as it was 23 years ago. back in the before the crisis this was $1 trillion in origination originations. so we think that if the economy is picking up and getting out of the doldrums, you will see the purchase market grow, and that will offset some of the re-fis out there, but everybody wants to look at the re-fi number, but there is more to the housing market than just the re-fi numbers. >> well, jason, and paul, thank you both. >> thank you. >> and coming back, rupert murdoch, his first divorce was the most expensive on record, and now we will tell you how much it could cost him in time around. >> and the demand for mansions is booming and just one problem, there is not enough supply, so what is a multimillionaire to do? find out multimillionaires when we come back. [ male announcer ] frequent heartburn? the choice is yours.
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part of our goal to inspire more than three million people to rediscover the joy of being active this summer. see the difference all of us can make... together. hello, carl. >> housing inventories are falling across america, but the biggest declines are altos research shows that the homes priced at $1 million or more
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fell by 76% at caramel by the sea, and 70% in palm beach and 58% in old greenwich, connecticut, so what is selling and what is left? well, in palm beach, this home sold for $11.3 million and 885,000 square feet, and a pool and italian gardens and sales like this are the reason that the prices are up. and in caramel, ocean views and 5,000 square feet with four bedroom bedrooms and wine cellar and movie theater, and great look out front, and $8.2 million and the frenzy means that $1 million or $2 million won't buy what it used. to in old greenwich, connecticut, this is nice porch, but $2.8 million. mansion sellers maybe good, but if the sales continue to fall, it could hurt sales for the rest
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of the year. >> thank you, carl. sticking around, a new development in a high profile divorce world. ro reuters reporting that the continental ceo and billionaire harold ham's pending divorce could result in the largest divorce settlement in history. he never signed a prenup, and this comes after rupert murdoch is going to divorce wendi deng, and joining us is douglas. how binding are these, and does it resnult a quicker selt eleme -- settlement or not? >> here in new york, they are looking to end the divorces quicker and not go to the court system. if you have a binding prenup one without any duress, the court is going to quickly get it out of the press as long as possible.
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>> and so where are the deng/murdoch example, where are the variables at this point? do they know everything that is going to happen? >> they should know. they made two amendments since the original prenup. one of the points of contention is going to be the voting right s for their children, an wendi may hold rue pupert up for that enforcing the prenup. >> that is the critical point, because we understand she got very upset when she understood that her two children by him, and in fact, in a charlie rose interview, it was revealed they would not have the voting rights like from the marriage before, and can the court go deep into the organizational structure of a business more than just who has what in terms of monetary terms? >> well sh, the court what they will do if they get into that is to assign a special mediator to help them through that, because i am sure that news corps is going to come in to try to quash anything that has the do with the voting rights because it is a public corporation. >> i will jump in, guys, because
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it was a bitter an contentious issue for deng and murdoch, but it was settled and a lot of sort of money that went to the trust. murdoch's older children and took so long and so many lawyers involved in that negotiation that has been done, and very unlikely that they will go in and try to undo that and the same with the prenup which is signed in 1999, and murdoch of course very wealthy back then and wendi had good representation, and so unlike the harold ham case, no prenup and they got married before harold ham was wealthy, and we will hear more of it. >> yes, he should have got a prenup once he made money, and no prenup, and this is going to be the most expensive divorce in h history. >> and what is that post prenup, and is that when you say to the spouse, sorry, i have made a lot of money, and i need to put something on the line. >> yes, or on the verge of it
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and they are already marry and hence the post nuptial and try to settle it before it gets out of hand. >> and in the critical case harold hamm's wife was an executive in the company and she was important for the creation of the wealth and wendi deng had her own side projects and not that involved with news corps, and that is a big difference as well. how involved they were in the creation of marital wealth. >> oh, exactly, and in oklahoma as in new york, it is a an equitable distribution state, and so she is going to have to show that she was instrumental and she will show it, a lot of the wealth is going to be split and he is going to have to sell a lot of the interests to bring him under 50%, mark. >> and dougs l. s las -- dougla more broadly, because you been doing this for a long time, and does the price fluctuate with the assets going up and down, and does the party be slower to
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leave because they don't believe they will get what they are worth? >> yes, when the markets depreciate, you will see market assets get the peak, and so i have seen people wait. >> who knows if this is what it is about, but clearly quite a rally, and your business may pick up. douglas, thanks for time, and great insight. >> have a good day, gentlemen. >> and our own robert frank. >> nothing like vows and romance, is there. >> and the executives at toyota are about to get a big pay raise. we have the details after the break. ♪ bonjour
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on the east coast and 9:29 on the west coast. and the consumer sentiment index down 82.7 from 82.5, and that was the highest level in six year years. and boeing will announce plans for a larger version of the 787 dreamliner, and that newest version would be announced at the paris air show next week and hold 323 passengers. and pandora sued by bmi over licensing fees. pandora refuses to pay higher
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licensing fees off of playing the same song on mult le tle tl multiple devices. and in toyota, the executives are to sign off on a 20% pay increase for the company's leadership. phil lebeau joining was more on that. are they paid in yen or dollars, phil? because if it is yen -- >> it will be in yen. >> well, that is break even, isn't it? >> well, simon, it works out to $15 million in u.s. dollars, and that is what the pay bonus will be once it is approved at the shareholder meeting which is going on today in japan. there's a number of interesting headlines coming out of the meeting. one of them is from toyota because of the yen, and he says that they will maintain current production, and the board will add three outside members and remember, they said they would add outside members including
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g.m. executive mark hogan. and take a look at gm or toyota in the united states, and the market share year-to-date. they are the only ones of the top four that are losing market share, and what is interesting here is that you look at why. clearly, there is an inkrecreas for the big three when it comes to pickup trucks, but at the same time, slump in mid-sized sedans here in the united states, and that has long been the bread and butter for toyota, and as a result, the head of toyota here in the united states says that it is unlikely to hit the 17% market share which is the high in 2009 before the recall issues, but take a look at toyota versus its come ppetis here in the u.s., no comparison, because they are outperforming ford and general motors and chrysler is not publicly traded at this point, and keep that in mind as you look at toyota, and kelly, the board meeting going on today, and one other point, there is a judge in the united states delaying the settlement of claims $1.1 billion tied to
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the recall for the unintended accelerations. it is likely going to be approved ultimately, but for now the judge has delayed the final approval. >> and tacoma is a great truck, but they have struggled to get traction in light truck segment of the market. >> and the tundra does struggle compared to the f-series and the silverado, yes. >> and tough battle for them. phil lebeau, thank you, sir. >> looking at the intracurrency markets ahead of next week's fed meeting. asian and u.s. currently will follow, on the prospect that they will follow next year. david wu head of global ratings and research at bank of america, merrill lynch from his office in midtown manhattan and welcome to you both and welcome to the program. allen, first to you on the
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question. there is a case that it is the strategically secularly stronger dollar that has upset the apple cart, sond what is the trend here? >> well, it is mixed against a variety of currencies. the dollar is strong against merging market currencies for the most part up until about yesterday. strong against the commodity currencies and pretty much sideways versus the euro the weaker, and obviously the yen is strengthening as of late. so it a mixed bag there. >> and how much further is the dollar going to strengthen in your view from here? >> well, on the multi-year basis, this is the beginning of the long-term trend and anyway to upwards to 20% on the trade-weighted basis and a lot of appreciation, but it is slow. what you are seeing here is that the initial phase as the fed retracts from the qe, you are starting to see initially people that are selling bonds and the initial instance and the dollar will appreciate slowly. >> david d, do you share that vw and does it depend what happens
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next wednesday? >> well, a lot depends what happens wednesday, but allen is right that the big story of the last couple of weeks is that we have seen a massive exit from em which is expanding the board, and to the extent that it is shorted the yen, and that is shorted the dollar, so in that position, it is a liquid whichdation story to drive weaks on the the euro and the yen, and we believe that tapering expectation is going to be very much alive going into next week and beyond and a great opportunity to sell the euro against the dollar. >> make sure i follow this. are you saying that what we are likely to see from here is a stronger euro, stronger yen or that is the near-term trend? >> well, a near-term trend, and as i said the stronger euro and the stronger yen is position of liquidation, and now the liquidation has run the course. this creates great opportunities, and great levels to actually establish the dollar long against these two
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currencies. >> allen, focus on the very big call that you made and the dallas will rise 20% on the weighted basis, and over what period? >> long-term period. >> that is going to decline the dollar down 30% over the past ten years, and what does that mean for the u.s. economy, because that is a huge move. it means that the exports are less competitive and less come p pettive for the tourists to come here, and talk me through that. >> well, it is a serious drag as far as the economy is concerned, simon, because when you see a change in the currency, the real economy effects come through with a lag of 18 months to two years. >> permanent at the same time. >> yes, and if the dollar exchange rate chak changes permanently, then a sustained change. foreign direct investment inflows are part of the story, and the reshoring and the strength of manufacturing will be a part of the story, too. >> and reshoring, and haven't
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people produced cars in the united states because they felt that the dollar would be down for years because the fed would debase it. if you are saying that the dollar would rise it is cheaper to produce it in brazil and export it into the united states. >> three years' time, yes, that is the case, but the immediate story is the one of the improvements that we are seeing on the energy size in particular, and idea that we will see reshoring in anything that is in particular intensive. >> david, if you look at the late '90s and the severely negative effect on a lot of emerging markets and obviously conditions different between then and now, but how much ris fok ar real crisis in nernlging markets as a result? >> well, you are right. merging markets in some sense is facing a perfect storm. i mean the combination of china getting worse and the u.s. doing better is a bad combination for merging markets. think about it. most of them basically do, make a living selling to china, but at the same toime with the
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current deficit tracking the highly mobile capital and u.s. doing better with the higher u.s. rates weakening the opportunity for investment. to the extent with a big sell-off and not many people have managed to get out of the long em position, it is no doubt that after next week if the tapering expectation does not come down, i suspect that the em will remain vulnerable. >> okay. david woo, and important stuff and we will look for it next week and allen ruskin, thank you for your time as well. coming back, it did not work for jcpenney, but one company is betting on the playbook. best buy. and also lululemon thinking about the male yoga pant is the untapped market that lulu needs. tdd# 1-800-345-2550 [ trader ] when i'm trading, i'm so into it,
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the street," i'm josh lipton, and here is american tower saying they will enter into a new credit facility and intends to seek about $1 billion in a new unsecured revolving credit facility with a five-year mature of the stock popping at 2% this morning. >> thank you, josh. lululemon is betting big on men. outgoing ceo christine day says that the company plans to open up men's stand alone stores by 2015. 20% of the sales come from men, and liz is an analyst along with sam, and sam, we asked you before the break, is this really what the world needs? >> well, it is a really good stock and it is -- i thought this would happen for quite some time once the percentage of the business warrants giving it its own space. >> why has it been outcomeping the rest of the business? >> because it is a smaller
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number, and it is sort of love large numbers on the women's side, and the men's business started out with a little bit of floor space, and they keep evolving the product. they have recently hired a new head of men's design who is taking over. and he has had a few things hit that have done significantly better and talking about the polo shirts and so on in the for the men's business that are doing well right now at the same time. >> and that didn't stop you from going from buy to neutral recently, and due to other concerns regarding christine day's departure? >> well, definitely. i think that the product they make is great. i think that is part of the scenario for this company, but the real picture with this company is the culture and the relationships they have with pretty much everybody. yesterday at the conference apparently christine did some great one-on-one breakout. we only hope that the new ceo
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will drive the business with the same culture. however, we think that culture outweighs the product in this instance and that is why we downgraded the stock. >> interesting. liz, what's your view? the stock is down 12% since she announced her leaving and you are going into the area where the under armours and the nikes and the adidass in the world are tough. can they make a go of it in the men? >> well, the men's products are difficult, but the golf capsule did well, but lulu has unique store formats and they can engage with the customer on a different level, because of their stores. and i think that if they develop a men's concept that is as compelling as the women's concept, they should be successful. >> come on, liz. cut to the chase, do real men wear leggings? >> i think that, you know, menswear is a broad concept. i think that there are
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opportunities in golf and running. the product is really strong, and i think that it is going to be successful and i will be interested in how they proceed. >> well, liz, this is important, because what lulu did was in innovation chanmeeting demand f the women, and the black yoga product is not just something that is for yoga, but it is something they wear all of the time, because it is slimming so my friends say, but on the men's side if there is not something innovative here that men specifically want here? >> well, christine day's comments yesterday talking about product that was sort of, you could wear in your everyday life, but you are also perhaps engaged in some athletic activity or some sweaty activity to translate into your everyday life. >> what does that mean? that is leggings then. it is leggings. >> i am sorry, simon, are you saying leggings? >> l-e-g-g-i-n-g-s.
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>> nobody wants to see the men in leggings, and that is not where they are going, but they are shorts that perform well, and the polo shirts and the tees for working out and a lot of the foundational garments and lot of the men like the underwear and they say they perform particularly well and so they have great product and they will replicate what they have done in women's which is to connect and engage with the customer at a different level than nike or under armour would. >> well, we all agree if they sell to men, they have to get the sheer thing down, because it is -- with guys, that would just be wrong. liz and sam, thank you so much for the time. >> thanks so much. >> thanks for having us. >> i think it is an uphill battle, carl, because nike and under armour is so good, and it does not leave a lot of space for lululemon, unless they come back. >> i am stuck on the notion that underwear have to perform. are they having songs and shows?
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>> yes. >> and forget cutting the coupons for the groceries, and we found a startup that will help you with one click of the mouse. my ceo of the supermarket is coming up. but rick santelli extrapolates this morning's data. we will be right back. [ male announcer ] my client gloria
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let's get to the cme group,
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and rick santelli with the santelli exchange. hey, rick? >> good morning, carl. if we look through the data today, i find it very fascinating, because the ppi was hot, and we could argue with inflation, and the problem with inflation is not whether you get it or not, but it is about a timetable and not whether you get a correction in the stocks or the programs continue to work, but it is a timetable of how long the issues remain in the marketplace. a couple of other things that were critical that we didn't hit on hard enough, tick data and treasury international flows always a couple of months in arrears and that is the way it is put together, but there is a trend of less foreign interest in some of the dollar-dominated financial assets with si something to pay attention to, and of course, the big enchilada was the weakness in the university of michigan and we need to get into the deeper way, and i think that eamon javers has refocussed a conversation, but i want to put my two cents
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into this. whether it is being the top guy ton the search engine or playin golf at pebble beach, and whether it's a news website writes market moving articles and from netflix that regulators say is okay, it's the principle, but it's also the price. university of michigan since 1946 has gone to what they call sponsors early. even the federal reserve is a sponsor. my guess is they're pretty much a sponsor or involved in anything that moves markets in some capacity. so there was not ignorance on this issue. but something did change. actually a couple things changed. thomson reuters and some of the new owners of numbers like chicago purchasing managers survey, not doing anything illegal, but the price of poker has gone up. so is the argument really about principle? or is the argument about price? if tweeting, for example, which is basically free, if tomorrow
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it was $1 million to open up a tweeting account or twitter account, would regulators look at information disseminated in that fashion the same way? i ask you. we had a market -- we have many market moving stories that move the treasury markets. what if they're written on a website that's subscription? i don't hear anybody complaining. what if the subscription was were $1 million? would it change the principle. when money changes principle, you know what i call that? it's hypocrisy. hypocrisy in its worst form. the third "p," players. what's really changed with many of the dynamics we're discussing are the players. the high frequency players. let's isolate that. in two seconds they can clear the table like a thousand ralph kramdensed a a kaf t ed atcafet. there's many ways to deal with
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it, but to ignore the gorilla in the room about principle and price, and, yes, things have changed. eamon's reporting, i was unaware of the two seconds. it makes all the old sponsorship rules different. nobody is going to be a sponsor if the two seconds happens before their five minutes. so that's all changed. but it's about high frequency players and we need to address this. it's showing up in every facet of the marketplace. carl, back to you and have a great weekend. >> rick, you have a great weekend as well. >> it's an important point and a story we'll keep following. in another sign that jamie dimon is looking to slim down jpmorgan, kayla tausche has the story next. [ panting ]
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jpmorgan is spinning off its private equity. >> most banks chose to exit the private equity. bear stearns exists at irving park capital. some did it because of the volcker rule which will limit banks' ability. one equity partners who
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portfolio was valued at $17.7 billion is not central to the other three business lines. consumer banking, investment banking, and asset management. it's also been volatile. jpm has $4.5 billion invested but the quarterly net income hasn't been positive since 2011. investors and analysts have questioned the losses which are caused largely by changes in the portfolio's valuation. the move to spin it off will be gradual. unlike the private equity arms of goldman sachs. this arm of jpmorgan comes entirely from the bank itself. when the future fund-raising round is completed in the next two years, it will be entirely from outside investors. jpmorgan i'm told will fund it until then. principals at one equity, some of whom sit on the executive committee, will leave when the unit separates but an interesting development for one of the last banks that was in this business. guys, back to you. >> and kayla, i'm wondering what your take is on some of the announcements we got yesterday regarding the change of the chief risk officer. you talk about those on the
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executive committee. how material is that to the way jpmorgan does business? >> i believe it's a positive development. john hogan stepped down for family reasons last year or perhaps it was early this year. when ashley bacon took over this role, it's a sign he's keeping it but he did a really good job and the executives were pleased with the job he was doing. the role john hogan will return to is a newly-created role. it seems at least the interim chief of the risk department at jpmorgan passed that test with flying colors. i view it as a positive development and because of a lot of the executive that is have left, there are some open seats on the operating committee, on the executive committee. the fact they're finding executives to fill some of those roles is a positive development, too. >> incomer is again, i believe british. thec fo is british. how many british people does it take to run a big american bank? >> i don't know, simon. you tell me. it's an interesting point but keep this mind jpmorgan is a global institution.
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they get a large part of their revenues abroad from europe and asia. they're really bulking up their european investment bank trying to get some of the business the european banks haven't been able to fund because of the crisis ongoing there. i don't necessarily view that as material to the way the bank will be running at home. >> certainly after those comments from dimon earlier in the week the first real public comments since he consolidated or withheld that control of the chairman and ceo office, they are getting back to work it seems after that long-term distraction. thank you. >> it seems like dimon is back to his old self, too, carl. >> exactly. >> kayla, thank you so much. we've lost some ground here. dow is down 61 after having a relatively tame morning. >> and the vix back up, just a little move, but going into a friday when there's not a lot of people who want to put on big positions. you can tell they're not wanting to give much exposure. >> maybe they're aware john is coming up on your show at 11:00
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and he may give some bearish signals on the fed. >> what to expect next week and then it was pointed out to me earning season is three weeks away. if you can believe that. >> again? >> the question is whether it's going to matter this time around. on a macro level has to moved the need "snl." >> what are they going to say? what are their forward looking statements going to say. they have to be surely less optimistic. >> are a at least less confident. >> i would love to know about some of the hedging contracts as well. . >> it's called summer friday. >> what are you saying? i'm a fill in. >> i'm saying you're taking off. he is actually working. >> have a good week next week. >> here is what you missed earlier on.
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>> welcome to "squawk on the street." here is what's happened so far. >> tiger, tiger. the u.s. open, i got a wave out of tiger earlier. >> no, no, no, he was waving at me. >> we are up 0.5. this is big. >> if rates go up slowly, which everybody thinks they will, it's the equivalent of a price increase. it creates urgency. we're actually seeing more sales now because rates are beginning to creep up very slowly, and if that continues and if we stay in a manageable range, we'll be fine. we're not worried at all. >> some say the fed has a communication problem. others say the market has a comprehension problem. which is it? >> i'm going to go with the latter because he comes on and just says, you know what? i am not going to let this happen. you guys think i don't have any bullets, you think i don't know what i'm doing. guess again. ben bernanke chronically underestimated by wall street.
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>> my view is that tapering by the fed will happen around year end, maybe fourth quarter, maybe early next year, and at that point rates will go up. >> u.s. assets i think will stabilize because they are the high quality end of the spectrum. the treasury market being the most important of the aaa assets but it supports u.s. equities which in comparison to the global equities are very high quality. the yield is much more transparent than it used to be. >> good friday morning. we're live at post 9 of the new york stock exchange. just when you thought the week could go out quietly after all that volatility, we're getting into an area where we might see some triple dige jets yet again. dow with the relatively mild morning down 82 points. s&p has lost about 7.5 to 1628, and the nasdaq is off almost 20. groupon surging this morning after getting upgraded by deutsche. price target goes from $6 to
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$10. restoration hardware sitting pretty. nice bounce. the company's earnings beat estimates. higher revenue and profit in the first lawyer, 41% comp, and the stock is it at a history high this morning. >> meanwhile, it's a huge afternoon swing pushing markets higher yesterday in part because of what one man had to say. "the wall street journal's" john hillsonrap will be here to tell us. the polls opening in iran. could there be a repeat of the massive protests we saw four years ago. we'll be live on the ground to find out. and the store within a store model working somewhere. find out which company took former jcpenney ceo ron johnson's idea and ran with it. the fed reiterating it will be keeping its short term interest rates low and according to john over at the wsj, the fed has been trying to con fins investors to stop overreacting. are markets overguessing the
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fed? >> kelly, are we going to get into it over tapering again? the last time we talked about this, i thought i was going to get a drink thrown at me or something. >> this is actually the conversation we're having right now, john, because my argument last time around was that taper is an appropriate word to be using in this context. you say it's not. why? >> well, listen, people in the market can say whatever they want. what i say is that you're not going to hear the word out of the fed chairman's mouth next week because they think it connotes this kind of steady process towards ending q esmth and i don't think that's where they're going. you know, i think a at some point they will want to pull back a little bit but it's not a steady continuous process in their mind. there's going to be some variability to it. >> what really happened yesterday? did ben bernanke give you a call and say i'm a little worried about these markets? >> well, you know, i'm reporting
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my stories -- actually, what i did yesterday was a blog post, so it was kind of interesting to me to see how the market reacted to a blog post. >> steve, do you think the market overreacted to that blog post? >> you know, it's always hard for me, kelly, to know what the market knows. with all due respect to j.pon, it's a little unclear to me what the new information was in the story that he wrote, and it's not jon's fault that the market reacted or didn't either way. when i see him saying that the fed is going to reiterate that rates will stay low even after they taper or do whatever they're going to do with the amount of qe, that's not news to me and i'm not sure it's news to people who have been following the news flow from the federal reserve. the fed is on the record with two different lit tus tests for policy. one is that it will continue to end quantitative easing until there's substantial improvement in the labor market. at what level is a matter of debate. and rates will raise when we get
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to 6.5% unemployment and/or 2.5% inflaution. i believe that's still to be the case. if the market took new news from jon's article or blog post, then i'm happy jon was able to inform them of that new news. >> jon, was there news in your piece? >> first of all, you know, steve is informed and following this debate, so, you know, it makes sense that he kind of understood the kind of nuance of what this blog post was saying. you know, i will say that one thing has changed since -- bernanke has been saying for some time at his march press conference, at his joint economic committee testimony a few weeks ago, that these are two separate instruments. when they taper, to use your word kelly, that doesn't mean they're any closer to raising interest rates. one thing has changed, steve, and that is that the market is behaving in a way that the fed wouldn't want it to see react.
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we're seeing futures markets acting as if rate hikes are coming sooner than the fed had been saying before. >> i don't think i agree with you there, jon. >> what's changed is that the market has moved. >> i don't think i agree with you. when i look at the change in interest rates over the past several weeks, what i see, first of all, is i think there's an emerging belief in the market that the economy hasn't suffered quite as much from the sequester so a little more growth, a little less inflation. and maybe a little bit less qe, and i think you and i can have a semantic argument, i'm not sure the value of it, is the market reacting to nearer term tapering or nearer term rise in interest rates. i would submit it's the former. i think you're suggesting it's the latter. either way i think the message from the fed which is -- you're right, it's been missed on markets, is that the fed believes reducing the amount of quantitative easing is not the same thing as tightening and that's the message i keep hearing from bernanke. >> let me ask both of you, i
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love your opinion from both of you, do either of you believe that the fed or the chairman sees the testimony from may as a bungled tuned, something they would like a do-over on? jon? >> i think they've been maybe a little frustrated at how hard it's been for them to kind of get a complicated message out there. i think that's a fair point. you know, you're not going to find many fed officials saying, yeah, we bungled this. but it's been really hard -- i think the market tends to think of things in very binary form. you know, easy monetary policy, tight monitor policy. they're sending a nuanced message. they might dial back the bond buying a little bit. it won't have a big impact on the short-term interest rate strategy which is directly tied to the unemployment rate. you know, it's like these are nonbinary messages they're
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trying to send to investors who are thinking risk on/risk off all day long every day. >> steve? >> i think the fed's message is confused on qe and i think the fed is sending a confused message, and i think the children did that as well during his testimony. i don't think they've made clear substantial compared to what and improvement compared to when. i think he needs to do that. and i think that's why you have had a lot of the volatility in the market. i think the market is confused here. i think they're less confused about the interest rate issue, and i would just offer part, jon, of the market is binary. that's the short-term market. i think ultimately that the market is able to live with this idea if they go from 85 to 65 for a while, for example, or to 50, that that is not the end of the world here, that there is still stimulus. i think the short-term trading part of the market will react probably pretty violently but the longer term effects will be less muted. >> i make two points to that. one is i think steve gets to an important point which is that i
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think the fed wants all this conversation out there because when they do act at some point down the road, it's not going to happen at this june meeting, they want the market to have had time digesting it and kind of coming to grips with what the policy is. that's one point. the other point is, steve, you know, i think that -- one of the things i was trying to say in this blog post yesterday is that, you know, the short-term part of the market, you know, euro/dollar futures, fed funds futures, ois swaps rates, that's the part they're trying to control -- >> but jon, i want to cut you off, i'm really sorry, if the short-term part of the market was so concerned, why are they still only showing a 50% probability of a rate hike in january 2015? that's why i don't really think that the fed has lost that battle or even has confused the market on rates. the confusion is on qe. >> i don't think they've lost the battle either. but, you know, i think there's a risk that people are taking the
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wrong message from all this discussion about cutting back bond buyinging that they have to be mindful of. >> in one word because we have to go here, the fed to some extent is constrained. even if they wanted to do more, we're talking about a mortgage market that is basically blanched. we're talking about treasury supply that's coming down because the deficit situation is improving. and no one is out there really talking about the fact that inflation is so low. so i wonder, can we get a quick sense of whether if the fed had to do any more from here, what they might do? >> well, you know, i would think they would keep working the tools they're working. for one there's a self-correcting mechanism here. if the unemployment rate -- if the job market has stalled and the unemployment rate doesn't keep falling, the market prices in low rates for even longer than it had priced in before. you know, there's a limit to how much bond buying the fed could do but i don't think they feel that they're at the limit, but that's not where they're looking right now. >> i know. >> they think inflation is going to tick back up.
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they think inflation will go back towards 2% and as steve said, they see an improving economy. >> yeah. the question is whether we will see conditions continue to hold and, of course, what to expect next wednesday. jon hillsen rath, steve liesman, thank you for your time. >> speaking of interest rates, if and when they do start rising fast, first time home buyers key to the recovery could be the ones hit the hardest. our diana olick is here to explain. good morning. >> good morning. you're right. rising mortgage rates are never a good thing in a housing recove recovery, but they won't hit every buyer and every deal in the same way. let's take a look at where rates have gone. on the 30-year fixed we were at 4.15% last week. that's up from 3.59% at the beginning of may. that's a 14-month high. while that has pushed refinances down 36% in a month, purchase applications are only down just about 2%. but rates actually mean nothing to a large segment of the buying
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population. 32% of buyers in april were all cash up from 29% a year ago. that is no mortgage. and that's the latest reading from the national association of realtors before the rates really started to spike in may. they are keeping the low end, that is the distressed end of the market going. around 20% of the market still investors, again, who largely use cash. now, let's focus in on california. a big investor market where sales are now surging. the typical mortgage payment that home buyers committed to last month was $1,227 and that was up from $1,157 in april and up from just $1,006 a year earlier according to data quick. adjusted for inflation, last month's typical payment was still 47% below the 1989 peak of the last real estate cycle and 57% below the 2006 peak. so who do rates hurt? like you said, the first time home buyers. they accounted for 29% of home
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purchases last month. they should be up around 40% and they're nowhere near that. the trouble is they're squeezed by tough underwriting and by higher fees from fha and fannie and freddie. what's so interesting right now is that jumbo loan rates are actually coming very close to where those conforming loans that most of the first time home buyers use. a jumbo rate, 4.28% this week. a conforming, 4.14% according to bank rate. that is an amazingly close spread. carl? >> that's right. i'll pick it up, di ab na. thank you for that important space to watch. consumer sentiment is declining in june coming off a six-year high. we saw that number hit at 9:55 a.m. as we've been reporting this week, elite trainers are gaining early access to this data for a fee. eamon javers is all over this story joining us with the latest. anything today in particular that caught your attention? >> good morning. we did see some movement today and what we've been doing is analyzing it here in realtime
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with our computers at cnbc to see what the move was, but it did appear to me watching the spy live two seconds before we saw the consumer sentiment number there was a bit of a downward tick. we have seen some increased volume in trading right at that 9:54:58 time frame. remember, that's the time at which traders get the early advance look if they pay thompson rout ithomson reuters for the data. our own reporting on this came out a little later. we didn't have access to the early numbers. once we were able to report it, it looks like consumer confidence was a little bit of a bearish number and that might have contributed to the downward tick we saw when the traders got the advance number. we're tro processing all that running it through various supercomputers and we'll get you the charts when we have them ready to go. yesterday, let me show you this event we saw in terms of natural gas. this is trading ahead of the natural gas government report. they put out a government storage report at thursday at 10:30 a.m. that's the red line that you see
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there, 10:30 in the morning. about 7 seconds before the data was released by the u.s. government you see the spike up in gas futures. that we're told also matches the sort of general gist of the trend in terms of the number that was released. we saw it again yesterday. we have questions in to the department of energy. they have not returned our calls yet on that one. we're waiting to find out what possibly caused that. >> very busy, eamon. a lot going on today. i'm sure you will hear from them soon. thanks. eamon javers with continuing coverage of a great story. when we come back, a very important moment in iran as the country heads to the polls to elect a new president for the first time since 2009. we'll go live on the ground in tehran coming up. first, rick santelli tracking the markets today. rick? >> well, i tell you what, yesterday we had a poor 30-year auction. shortly thereafter we had jon hilsenrath's blog. arty has been doing this a long
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time. we'll talk about his ideas on things moving interest rates ten minutes from now. why didn't you go to harvard, arty? >> i don't know. to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."
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take a look at the s&p financial sector. it's one of the ones we're following closely as people continue to digest the direction of interest rates. there's one stock in particular which is weighing on performance. it is the weakest sector of the s&p. josh lipton back at hq with more on that. >> kelly, we are watching
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american express this morning. the analysts at barclay's less bullish. cut axp to equal weight and they raise the price target to 82 from 72. they say they see near term downside to the multiple given their expectations that revenue trends could remain soft keeping earnings growth below long term guidance of 12. % to 15%. an important day in iran as people head to the polls for a new president. we will see a new president in iran. ali is live on the ground in tehran with the latest. ali, the big question today is turn out. what can you tell us? >> reporter: exactly. that's been the big question here. that could make or break the election for at least the reformists. it got off to a very slow start this morning. we didn't see huge crowds. but as the day progressed the
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crowds built up and built up. in downtown tehran which represents the poorer part of the city, the crowds were huge at the mosques there, and it seemed like the voters were split between two hardliners downtown. the current tehran mayor and current nuclear negotiator. but if you went further uptown, the younger supporters seemed to come out in their droves later in the afternoon for hassan. he's not a reformist but he has the backing of all the major reformist leaders in this country. and that was what we were waiting to see, if the young people came out. in iran there are 50 million eligible voters and over a third of them are under the age of 30, and that's the market he wanted to tap into. and it seems he was able to do that. now, there's about ten minutes left of voting today. we're going to have to see how many people come out and we'll probably get the results sometime tomorrow. back to you. >> ali, just quickly though,
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you're saying you did see quite a bit of turnout specifically for rohani? >> reporter: for everybody. there was quite a large turnout. it was slightly split for the hardliners downtown and a lot of the young people came out for rohani this afternoon. >> thank you so much. nbc's ali arouzi from tehran. dow is down in the red down 64 points after finishing well in the green yesterday. will we see a late-day turn around? we'll dig deeper into the markets when we come back. hey kevin...still eating chalk for heartburn?
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ink from chase. so you can. welcome back to "squawk on the street." my guest arty, you heard what i said before and i wasn't being insulting to anybody, arty, harvard, none of it. here is the conversation today and arty got me thinking about this yesterday. m.i.t. programs are the new cream puff for many of those in power at the federal reserve,
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and many of the people that write these models are pretty darn intelligent, and fred programs, hilsenrath article, all of these things affect price. arty is an old time trader. you deal in value. are price and value the same thing anymore? >> well, i think you can not price value in these markets without having a clear understanding of what our fed and government is going do but what the japanese government and japanese central bank is going to do. i think we're seeing so much volatility because there's no way to know. we've never been in this place before, just as -- >> richard fisher? >> fisher said on an interview with you, there's no central banker in the world that tell you how to get back from here because we've never been here before. the markets are trying to price things they've never priced before. what is the value -- what should the yield on the ten-year be -- >> you might not have gone ivy league, but that could be the best way to summarize the conundrums in the market. in the hilsenrath article, he
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talked about how short-term interest rates, and that's your venue, usual dollar futures, converging the libor, they have forced people with their programs based on price, they can affect price, to make those things basically rally where fed funds and everything are bumping up basically against 100, okay? so when the price program models may change or taper, whatever you want to call it, may change, it affects the price. but the article of hilsenrath really confused the two and talked about value saying this is pricing and a tightening but we don't know that, do you we? >> that is a constant thing in the markets. the market can stay irrational longer than you can stay solvent. a lot of people were pricing for an indefinite fed program going on forever. when that changed even a little bit, you have a choice of taking losses or making adjustments. >> so the moves really are technical more than strategic.
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>> i think people protecting themselves, especially think about it if you put those trades on six months ago, you did very well. >> all of a sudden you're losing a lot of money. do you think what's the strategy? hit a bid i need to get out? >> yes. people are more tied to their pocketbook than anything else. >> all right. back to you, and arty, you're always an ivy leaguer in my book. back to you guys. >> all right, rick. thanks very much. have a great weekend you guys. bell is about to sound across europe with just a few minutes to go in the trading day. we'll have the close. details on the impact across the u.s. when we come back. e most f, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades
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the european markets are closing now. >> stocks off the highs of the session trying to shrug off disappointing economic data from both the eurozone and the u.s. taking a look across major european bourses. we can see the footsie 100 barely positive. germany's index adding half of 1% there. it was a weaker close for italy. spain looking to turn positive as the final bell rings. now, about a percent and a half down for the week in the dax. fr a lot of this on concerns about central banks pulling back stimulus. it's taken sen center stage not
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just in europe but worldwide. the firm says valuations are becoming more supportive, but carl, you have to wonder again with the weak china data we got whether there's anything about the fundamental story to like. >> how much more hoarding can they do with the growth they're seeing. let's gek a check on energy. >> traders here are very focused on what is happening in syria and the fact that we are now looking at the white house sending weapons to arm the syrian rebels. that is something that has really created geopolitics and put yeo poe geopoll ticks on th burner. earlier in the session, the open, a lot of heavy volume and then we have seen brent crude prices above $106 a barrel. traders say in addition to watching syria, seeing what the reaction is going to be from
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russia, from others in the region, they're also, of course, watching the iranian elections and they're keeping an eye on the north sea and supply issues there. so all of those factors are contributing to higher prices here in the oil market. also look at what has happened in the gold price. we saw gold prices rise here. that producer price index level coming in and that was something that helped the gold market, helped silver as well. silver the best performer this week and in this session. up about 2% on the session right now. back to you. >> sharon, thanks very much. with stocks heading back to the low it's, we're off 70 points. >> the important thing is overall we're looking a little more stable except for the international area. it was fun to watch hilsenrath and steve talk to each other. take a look at the s&p for the last two weeks. we were close to 1600 a few days ago. you see this choppiness and it's certainly choppy but at least it's a little more stable. where it's not stable, and this
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still has people nervous, is overseas where we're watching some of the big etfs associated with the international funds. there's the japan fund down another 3% today. that's the dxj. china is down. eem, this is a huge one. down another 1%. still no stability. you want to see how it's playing out international versus domestic. look at real estate. exchange traded funds, vanguard, and this is the global real estate investment trust. you can see underperforming again. this has dramatically changed. global used to be the big outperformer. now it's flipped around. we've talked a lot about what people are going to look at in their statements in the quarter here. i just want to show you some of the declines we have seen. since the start of april, eem, this is the big emerging market etf, down 7%. bond, emerging market bonds down 3.5%. those are notable declines. if you look at the bond funds,
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and this is the one everybody owns here, total bonds down almost 2%. that's what you're yield are, high yield down 2%, corporate municipal, and inflation protected. all of them on the weak side. i think the bottom line is a lot of people are moving into shorter duration funds. quickly, let me show you the sjnk. high yield, short duration. it hasn't dropped nearly as w much. 6% yields. so people are trying to move towards the shorter duration. what do you do? sell every bond fund that you have? i don't think anybody is going to recommend that. but a lot of people -- >> but a lot of people are saying why should we be in the bond fund. >> a lot of talk about whether it's time to buy some international bond funds. some have gotten killed in the last three weeks. now we're starting to say people saying this is an attractive entry point. nobody has been nimble enough to sell it. that's why people are so out of sorts here.
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it's not easy to figure out what the right entry point is. >> well said, bob. thank you. we have a big decline in markets overseas obviously. the nikkei gained some ground overnight. still in bear territory. u.s. market off of its highs today. definitely experiencing a little more volatility. just how resilient are we in the u.s.? joining us to discuss is charles ariel investments vice chairman and director of research and samir international strategist with wells fargo. good to have you both. samir, let's hop off on bob's point. if you have shied away from emerging markets, certainly emerging market bonds, would you be that bold at this point? >> absolutely. you know, this is a time when you want to lean against the crowd. you have been talking a little bit about the outflows you have seen from some of the funds. in your opinion one of the best examples over the past few years is how you have seen outflows from stock funds and inflows into bond funds and you look at the relative performance between the two and it's been the exact opposite. i think now you're seeing a
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little bit of that between domestic and international where the u.s. has done well since the highs in 2007 on a relative basis. you have some of those people chasing performance whereas the international side is starting to look much more attractive. we actually from a contrarian standpoint like the fact you're starting to see some outflows. >> how do you live with yourself knowing what china growth is doing, knowing what the dollar seems to be doing on what appears to be a more secular level, more long-term level? >> you know, i think china is actually transitioning to more stable growth. once they get -- complete the rebalancing from being more of a consumption driven economy to an export driven economy, we feel they will be on a more stable trajectory. as far as the dollar goes, there's too many people that are saying that if the dollar increases, that international and emerging markets will do poorly. i think the best example is what you're seeing in japan, which is the policies there have weakened the yen, but beyond the weakening of the yen you're seeing outperformance in the japanese equities versus u.s.
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equities. >> i can understand the argument for owning bonds, but bond funds, any fundamental reason why people should be in these funds? >> no. a short answer is no. bob said can you sell all your bond funds? the answer is yes. i have said this on your show a couple times before. every long-term bond right now is over valued. interest rates are going to go up. there's a negative expected real return on government bonds. i have told people to go home and look in their closets, find every long-term bond they have and sell them because they are all overpriced. >> but my point is this, not whether bonds themselves are the problem because a lot of these products you can hold them to ma you are tur maturity, you get the payment, fine. i'm talking about bond funds. >> you don't want to oen individual long-term bonds and you don't want to own long-term bond funds. it's been a safety trade where
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people in the u.s. for obvious reasons wanted to flee to a safe asset. people thought they were going to get a real rate of return. that was fine. we now got to bubble prices. >> you can still argue we have inflation rates coming down. i understand that there may be somewhat of a pickup here with regard to rates, but we're still looking at a disinflationary environment. so if you're holding a bond itself, that doesn't seem to me to be as problematic as some of the funds. >> you're entitled to your opinion. my opinion is we're going to have inflation in the future. the expected inflation rate is going to be north of 2% which means that the real return on a ten-year government bond is negative. you've got risk and no expected return. >> fair point, fair point. sameer, do you want to weigh in on this at all? >> in your opinion you have to maintain that asset allocation and diversification. with the recent back up in yields, they're starting to look a little attractive. over the long term if bonds do
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poorly because rates go up and if rates go up for the right reason, which is the economy is getting better, the stock portion of your portfolio should do far better and it should more than offset what you're losing on the bond side. there's no reason to make that bet too big if you see inflation -- if it keeps coming down, you could see a pretty nice rally in bonds from here. >> have a great weekend, guys. >> thanks for having us. >> look who is back. >> back, baby. i'm back. >> david faber is back at post 9. >> cable consolidation has been on the minds of a lot of verse and we have some news regarding that. cable company charter communications and its 27% shareholder liberty media have been aggressively reviewing potential acquisition targets as they focus on how to consolidate the cable industry. but while that review has stoked rumors in the sector and has included an overture from charter to time warner cable, charter and liberty have not figured out what deal, if any,
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it can and will do to start getting bigger. a few weeks ago liberty's ceo discussed the idea of a far smaller charter entering a merger of equals with time warner cable. he tells me no offer was made. and the two men who speak with some frequency spoke generally about cable consolidation. sources close to time warner cable tell me the company indicated it had no interest in any sort of a link up with charter. believing that it was simply an attempt by charter or liberty in this case to use time warner's balance sheet along with its own high multiple stock to pursue a deal that would not end up making financial sense. time warner cable was concerned enough though about the overture to re-engage with long time adviser morgan stanley and hire an outside pr firm in case it needed to defend against a more public onslaught. that seems unlikely although liberty has sounded out financing sources for a charter/time warner cable merger
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of equals or a small premium deal that would require $15 billion in new debt in addition to a huge amount of charter equity. all of which is one reason why he told me the odds of such a transaction are low. liberty closed its acquisition up 27% of charter in may. that was a deal that included four board seats for liberty. in an interview with me last season liberty's chairman john malone made no secret of the fact charter could be a vehicle for further consolidating the industry. given it's well regarded management and the highly valued share price, you can see it's done very well, it seems how that will take place whether through a giant deal via time warner cable, larger deal such as the privately held cox or family controlled cablevision or the smaller but significant sudden link, all very far from being decided. each of those potential deals would require a great deal of financial firepower and finesse. for now while media types are getting hot for a deal, charter and liberty are still mulling their options of pursuing a
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transaction that can actually happen in homes of bringing john malone back to preeminence in the business in which he got his start. >> interesting. >> yeah. >> a little bit of smoke but not as much fire as i originally thought when i fuinally picked phone up and started talking to people but worth sharing. >> thanks, david. the ron johnson model is working somewhere, just not at jcpenney. we're going to tell you which company is actually copying his strategy when we come back. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting >> a little bit of smoke but not to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better.
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it's been a wild week for stocks. we cut through the noise and tell you how to make money with the fed meeting looming. eamon javers with shocking new details in our free markets/fair markets investigation. first solar is squeezing the shorts with a 71% jump in shares but one of our traders says it's all about to change. we'll see new about 15. >> loose change scott wapner. it's the retail version out of the movie inception. best buy is announcing its inclusion of microsoft pop-up stores months after it introduced samsung pop-ups. could best buy succeed where jcpenney did not? brian nagel is an analyst with oppenheimer and peter keith an analyst with piper jaffray. good morning, gentlemen. >> good morning. >> brian, first to you, can best
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buy make this strategy work here? >> i think so. and i think the basis of this for best buy is that it shows that this company is getting much closer with its key vendors. with samsung and now microsoft. so i very much think that best buy is on the right track. >> i can understand from a vendor point of view if i'm samsung or microsoft, i'd love a little store that short of shouts yeah me, but why if this didn't work for jcpenney will it work for best buy? isn't the point not the little unit but the bigger box it's inside of? >> if there's a one word answer to that question i think it would be execution. i think part -- probably the g biggest mistake jcpenney did was they tried to do too much at once. they were aggressively remodeling their stores, not doing much in the way of testing the concept before. best buy looks like they're going at this much more methodically. they're not remodeling their whole store. they're looking at the categories where would it make sense. presumably talking with vendors
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and going at it from that dres. >> peter, obviously a big part of the issue with jcpenney was trying to cater to a consumer who historically had not been in their universe. that doesn't seem to be the situation with best buy. the question is on valuation, how long do you stick around, right? >> well, that's exactly right. when you look at what best buy is doing, they're not trying to change their customer base. in fact, they're arguably serving their customers in a more comprehensive fashion. in the says of samsung, samsung will have employees on the floor to help educate people on their products. microsoft apparently is going to provide some extra training to best buy employees on their windows platform. so you're going to see actually a better shopping experience for best buy. what i think is interesting, carl, when you talk about valuation is that this is a home run for best buy overall. both samsung and microsoft are going to be advertising these store in stores. they're going to be driving traffic to best buy, and we believe there is some type of
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xren sation for these real estate assets that best buy is going to collect, and that as we go forward this year will drive sequentially better and better results. >> that's interesting. thinking back to a time where people thought they'd have to sell half of their stores. one last wrinkle to all of this, you go to silicon valley, which i have done lately, and there are still a lot of people in and surrounding apple, for instance, who believe that ron johnson was dealt an unfair blow. and i wonder if you think that's still true? >> the way i look at the jcpenney strategy, i do think there's some truth to the idea that john johnson was not give enough time to let his strategy play out. i follow jcpenney for the past several months. i tell our clients i still think, i'm not recommending the stock at this point, but i still think ultimately jcpenney will work and i think a core of that will be to better highlight better products in their stores. some of that is going to be store within a store. with the comments you're
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hearing, i think there is some truth to that. strategy is as big as what jcpenney was trying to pull off, takes a long time to get right. >> interesting story on both fronts. thanks so much. have a good weekend. brian and peter. dow is off 96. we might hit triple digit levels on the down site. >> you usually don't see too much movement here. the vix up half a percent. >> as people take their positions for next week. one note here, lululemon, which we mentioned earlier, looking to cast a pretty wide net in its ceo search. take a look at the home page right now. for a job description, the company writes you report to no one, you are the ceo, duh. you are passionate about doing chief executive type stuff like making decisions, having a vision, and being the head boss person. we reached out to lululemon directly. a spokesperson said we've always been a fun and irreverent brand
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and love our stores and social media teams are not afraid to spark a conversation in our community. so this looks like it's real, kel. >> it's going to drive traffic to the website so from that point of view, maybe we should give them control over the yen as well. >> abe needs a page of his own. >> it keeps strengthening. this is part of the reason for the sell-off. >> online shoppers, one new startup says it can find you the lowest prices on everything from diapers to cereal all in one place. we'll put that to the test in just a moment.
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if you're wondering why the markets are down, dow is off 93, once again look straight to the forex markets. dollar/yen, the yen rallies sharply after essentially one day of relief. that's about a 1.1% move as, again, we have seen japanese equity futures losing ground. >> again on a friday going into a weekend. we have seen this for the last couple weeks. not driven necessarily by real news flow. it just seems to be a wiping out of positioning or questions about how you want to be positioned into next week. >> guessing next week it's all going to be on japanese central bankers as well as our own in the states. have you ever bought an item at one store only to find it cheaper somewhere else? today's squawk break through aims to change that by doing the comparison shopping for you. it operates like kayak by comparing products at eight
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retailers. the ceo of my supermarket joins us at post 9. >> thanks for having me. >> as usual, it's all about price discovery, right? consumers will gravitate towards that? >> absolutely. on small ticket items, grocery and drugstore products, is to take advantage of all the promotions but not overpay for all the other products the retailers are trying to get you to buy. >> so free shipping over $75. >> absolutely. >> right now just nonperishables, right? >> exactly. >> would that change in the future? >> absolutely. we started out in the uk where we have perishables as well and as players like amazon, fresh, and other players add more perishables, we'll follow the market there. >> you actually came in in 2010 and changed the strategy. what was the strategy before? >> the company focused more on providing data to big brands and we still do that today but i felt this is a great consumer application. to me what was lacking in the
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market and online for small ticket items is the ability to work for a retailer system to work for the consumer. unlike other retail efforts, we proactively help you find the best deal on a product. if you chose a product and there's a better bulk deal, a similar brand you should think about, we do all the math and we quantify the savings and help you switch if you want to. and then finally split it across retailers. >> why hasn't been doing this before? what's been the challenge in setting it up? >> it's tough to do it. it's tough to find products at the product level as well as create a basket that's easy for you to shop. it's easy for us to -- from the consumers' perspective to provide the whole breadth of the shop. i don't think it's easy to have a domain expertise in grocery and drugstore products. we're talking about hundreds of thousands of products. they change often, the promotion changes. it's a complex world. >> it's got to be.
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>> a lot of skus. it's interesting. we'll keep an ou on it. >> thanks for having me. >> markets are dipping into the red today. we've been almost at the triple digit left on the dow. "squawk on the street" will be right back. [ male announcer ] with free package pickup from the united states postal service a small design firm can ship like a big business. just go online to pay, print and have your packages picked up for free. we'll do the rest. ♪ we'll do the rest. i'i invest in what i know.r. i turned 65 last week. i'm getting married. planning a life. there are risks, sure. but, there's no reward without it. i want to be prepared for the long haul. i see a world bursting with opportunities. india, china, brazil, ishares, small-caps, large-caps, ishares. industrials. low cost. every dollar counts. ishares. income. dividends. bonds. i like bonds.
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welcome back to "squawk on the street." i'm josh lipton. check out monster beverage which is down today. there is an article by a forbes contributor saying that the american medical association may support a ban of higher energy drinks for people under 18. according to the article the ama is set to debate the issue this weekend. lots of scrutiny about the energy drinks. i have spoken to some analysts covering monster they have not heard of this news. some saying even if it's true the ama has no legal authority, only the fda can rule. monster is down nearly 3%. >> thanks so much. we mentioned the yen before the break. looks like the story of the afternoon. >> that's right. and it keeps telling us after people tried to dismiss the first sell-off in the nikkei, it's just a little bit of a correction, look how far we've been up, that story getting harder and harder with each
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passing day. >> the leaders on our own market are all the interest rate sensitive home builders. >> what does that tell you? >> some expectations differ on what central bankers will say next week. >> they still seem to like the hilsenrath angle from yesterday which is they're going to walk it back. >> great weekend. >> happy father's day. >> thank you, thank you. it will be fun. let's get back to headquarters. scott wapner and "the halftime." all right, guys, thanks so much. welcome to the half. four hours to go until the close of the week. right on the wall is where we stand on wall street at this hour. it's red arrows across the board. dow is down 73, s&p, nasdaq also selling off. here is what we're following on the half. free market it's/fair markets. eamon javers with shocking new details on how some investors are getting an unfair edge over you. bringing the heat. first solar shares up 65% in three months, but is the stock


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